UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 001-14429
 SKECHERS U.S.A., INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    95-4376145(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)228 Manhattan Beach Blvd.Manhattan Beach, California
    
    90266(Address of Principal Executive Office)
    
    (Zip Code)
 (310) 318-3100
(Registrants Telephone Number, Including Area Code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.    Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Earnings and Comprehensive Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.    Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1.    Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 6.    Exhibits
    
    
    27Signatures
    
    
    28
 2




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##### 



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SKECHERS U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 September 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    248,828
    
    
    $
    265,675Short-term investments
    
    
    0
    
    
    
    30,000Trade accounts receivable, net
    
    
    286,085
    
    
    
    219,924Other receivables
    
    
    4,497
    
    
    
    12,177Total receivables
    
    
    290,582
    
    
    
    232,101Inventories
    
    
    326,651
    
    
    
    224,050Prepaid expenses and other current assets
    
    
    46,987
    
    
    
    28,233Deferred tax assets
    
    
    8,950
    
    
    
    8,950Total current assets
    
    
    921,998
    
    
    
    789,009Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    268,642
    
    
    
    171,667Intangible assets, less accumulated amortization
    
    
    7,762
    
    
    
    9,011Deferred tax assets
    
    
    13,678
    
    
    
    13,660Other assets, at cost
    
    
    18,196
    
    
    
    12,205TOTAL ASSETS
    
    $
    1,230,276
    
    
    $
    995,552LIABILITIES AND EQUITYCurrent Liabilities:Short-term borrowings
    
    $
    2,329
    
    
    $
    2,006Current installments of long-term borrowings
    
    
    15,767
    
    
    
    529Accounts payable
    
    
    231,533
    
    
    
    196,163Accrued expenses
    
    
    22,206
    
    
    
    31,843Total current liabilities
    
    
    271,835
    
    
    
    230,541Long-term borrowings, excluding current installments
    
    
    15,802
    
    
    
    15,641Total liabilities
    
    
    287,637
    
    
    
    246,182Commitments and contingenciesEquity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    0
    
    
    
    0Class A Common Stock, $.001 par value; 100,000 shares authorized; 36,310 and
34,229 shares issued and outstanding at September 30, 2010 and December
31, 2009, respectively respectively
    
    
    36
    
    
    
    34Class B Common Stock, $.001 par value; 100,000 shares authorized; 11,311 and
12,360 shares issued and outstanding at September 30, 2010 and December
31, 2009, respectively respectively
    
    
    12
    
    
    
    13Additional paid-in capital
    
    
    301,714
    
    
    
    272,662Accumulated other comprehensive income
    
    
    9,304
    
    
    
    9,348Retained earnings
    
    
    596,776
    
    
    
    463,865Skechers U.S.A., Inc. equity
    
    
    907,842
    
    
    
    745,922Noncontrolling interests
    
    
    34,797
    
    
    
    3,448Total equity
    
    
    942,639
    
    
    
    749,370TOTAL LIABILITIES AND EQUITY
    
    $
    1,230,276
    
    
    $
    995,552
  3




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
 Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    554,626
    
    
    $
    405,374
    
    
    $
    1,552,249
    
    
    $
    1,047,820Cost of sales
    
    
    301,975
    
    
    
    221,648
    
    
    
    824,535
    
    
    
    616,062Gross profit
    
    
    252,651
    
    
    
    183,726
    
    
    
    727,714
    
    
    
    431,758Royalty income
    
    
    1,888
    
    
    
    418
    
    
    
    3,148
    
    
    
    1,022254,539
    
    
    
    184,144
    
    
    
    730,862
    
    
    
    432,780Operating expenses:Selling
    
    
    59,516
    
    
    
    41,245
    
    
    
    146,262
    
    
    
    97,568General and administrative
    
    
    139,455
    
    
    
    110,454
    
    
    
    389,241
    
    
    
    304,340198,971
    
    
    
    151,699
    
    
    
    535,503
    
    
    
    401,908Earnings from operations
    
    
    55,568
    
    
    
    32,445
    
    
    
    195,359
    
    
    
    30,872Other income (expense):Interest income
    
    
    487
    
    
    
    322
    
    
    
    2,350
    
    
    
    1,612Interest expense
    
    
    (3
    )
    
    
    (987
    )
    
    
    (835
    )
    
    
    (1,944
    )Other, net
    
    
    (3,143
    )
    
    
    2,176
    
    
    
    (1,323
    )
    
    
    2,203(2,659
    )
    
    
    1,511
    
    
    
    192
    
    
    
    1,871Earnings before income taxes
    
    
    52,909
    
    
    
    33,956
    
    
    
    195,551
    
    
    
    32,743Income tax expense
    
    
    16,330
    
    
    
    10,175
    
    
    
    62,532
    
    
    
    8,236Net earnings
    
    
    36,579
    
    
    
    23,781
    
    
    
    133,019
    
    
    
    24,507Less: Net earnings (loss) attributable to
noncontrolling interests
    
    
    201
    
    
    
    (679
    )
    
    
    108
    
    
    
    (2,246
    )Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    36,378
    
    
    $
    24,460
    
    
    $
    132,911
    
    
    $
    26,753Net earnings per share attributable to Skechers U.S.A., Inc.:Basic
    
    $
    0.76
    
    
    $
    0.53
    
    
    $
    2.81
    
    
    $
    0.58Diluted
    
    $
    0.74
    
    
    $
    0.52
    
    
    $
    2.71
    
    
    $
    0.57Weighted average shares used in calculating earnings per
share attributable to Skechers U.S.A., Inc.:Basic
    
    
    47,586
    
    
    
    46,405
    
    
    
    47,268
    
    
    
    46,304Diluted
    
    
    49,176
    
    
    
    47,095
    
    
    
    49,017
    
    
    
    46,649Comprehensive income:Net earnings
    
    $
    36,378
    
    
    $
    24,460
    
    
    $
    132,911
    
    
    $
    26,753Unrealized gain on marketable securities, net of tax
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    8,151Gain (loss) on foreign currency translation adjustment, net
of tax
    
    
    10,372
    
    
    
    1,009
    
    
    
    (44
    )
    
    
    4,883Total comprehensive income
    
    $
    46,750
    
    
    $
    25,469
    
    
    $
    132,867
    
    
    $
    39,787
  4




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Nine-Months Ended September 30,2010
    
    
    2009Cash flows from operating activities:Net earnings
    
    $
    132,911
    
    
    $
    26,753Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:Noncontrolling interest in subsidiaries
    
    
    108
    
    
    
    (2,246
    )Depreciation of property and equipment
    
    
    17,641
    
    
    
    14,465Amortization of deferred financing costs
    
    
    1,111
    
    
    
    370Amortization of intangible assets
    
    
    1,287
    
    
    
    579Provision for bad debts and returns
    
    
    4,663
    
    
    
    2,959Non-cash stock compensation
    
    
    10,136
    
    
    
    2,464Loss on disposal of property and equipment
    
    
    42
    
    
    
    2Deferred taxes
    
    
    (19
    )
    
    
    (614
    )Impairment of property and equipment
    
    
    0
    
    
    
    761(Increase) decrease in assets:Receivables
    
    
    (63,355
    )
    
    
    (31,039
    )Inventories
    
    
    (101,911
    )
    
    
    70,925Prepaid expenses and other current assets
    
    
    (18,681
    )
    
    
    2,369Other assets
    
    
    (7,342
    )
    
    
    (1,362
    )Increase (decrease) in liabilities:Accounts payable
    
    
    32,332
    
    
    
    (6,339
    )Accrued expenses
    
    
    (9,642
    )
    
    
    10,229Net cash provided by (used in) operating activities
    
    
    (719
    )
    
    
    90,276Cash flows from investing activities:Capital expenditures
    
    
    (65,617
    )
    
    
    (31,197
    )Purchases of investments
    
    
    0
    
    
    
    (30,000
    )Maturities of investments
    
    
    30,000
    
    
    
    375Redemption of auction rate securities
    
    
    0
    
    
    
    95,250Intangible additions
    
    
    (40
    )
    
    
    0Net cash provided by (used in) investing activities
    
    
    (35,657
    )
    
    
    34,428Cash flows from financing activities:Net proceeds from the issuances of stock through employee stock
purchase plan and the exercise of stock options
    
    
    11,527
    
    
    
    1,344Payments on long-term debt
    
    
    (576
    )
    
    
    (275
    )Increase in short-term borrowings
    
    
    281
    
    
    
    525Capital contribution from noncontrolling interest of consolidated entity
    
    
    1,000
    
    
    
    4,000Excess tax benefits from stock-based compensation
    
    
    7,389
    
    
    
    0Net cash provided by financing activities
    
    
    19,621
    
    
    
    5,594Net increase (decrease) in cash and cash equivalents
    
    
    (16,755
    )
    
    
    130,298Effect of exchange rates on cash and cash equivalents
    
    
    (92
    )
    
    
    1,141Cash and cash equivalents at beginning of the period
    
    
    265,675
    
    
    
    114,941Cash and cash equivalents at end of the period
    
    $
    248,828
    
    
    $
    246,380Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    1,830
    
    
    $
    3,260Income taxes
    
    
    82,941
    
    
    
    1,624Non-cash transactions:Land contribution from noncontrolling interest of consolidated entity
    
    
    30,000
    
    
    
    0Note payable contribution from noncontrolling interest of consolidated entity
    
    
    16,032
    
    
    
    0Acquisition of Chilean distributor
    
    
    0
    
    
    
    4,382
  5




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010 and 2009
(Unaudited)
 (1) GENERAL
 Basis of Presentation
   Use of Estimates
  Noncontrolling interests
   September 30, 2010
    
    
    December 31, 2009Current assets
    
    $
    8,669
    
    
    $
    0Noncurrent assets
    
    
    84,960
    
    
    
    0Total assets
    
    $
    93,629
    
    
    $
    0Current liabilities
    
    $
    17,551
    
    
    $
    0Noncurrent liabilities
    
    
    16,031
    
    
    
    0Total liabilities
    
    $
    33,582
    
    
    $
    0
  6




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##### 



Recent accounting pronouncements
 Amendments to FASB Interpretation No. 46(R)
 (2) INVESTMENTS
  (3) REVENUE RECOGNITION
   (4) OTHER COMPREHENSIVE INCOME
   Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,Diluted earnings per share
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net earnings
    
    $
    36,579
    
    
    $
    23,781
    
    
    $
    133,019
    
    
    $
    24,507Unrealized gain on marketable securities, net of tax
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    8,151Income on foreign currency translation adjustment,
net of tax
    
    
    10,555
    
    
    
    1,093
    
    
    
    197
    
    
    
    4,992Comprehensive income
    
    
    47,134
    
    
    
    24,874
    
    
    
    133,216
    
    
    
    37,650Comprehensive income (loss) attributable to
noncontrolling interest
    
    
    384
    
    
    
    (595
    )
    
    
    349
    
    
    
    (2,137
    )Comprehensive income attributable to Skechers U.S.A.
    
    $
    46,750
    
    
    $
    25,469
    
    
    $
    132,867
    
    
    $
    39,787
 7




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##### 



(5)
    
    STOCK COMPENSATION   WEIGHTED AVERAGE
    
    AGGREGATEWEIGHTED AVERAGE
    
    REMAINING
    
    INTRINSICSHARES
    
    EXERCISE PRICE
    
    CONTRACTUAL TERM
    
    VALUEOutstanding at December 31, 2009
    
    
    1,505,694
    
    
    $
    12.01Granted
    
    
    0
    
    
    
    0Exercised
    
    
    (906,516
    )
    
    
    12.46Cancelled
    
    
    (24,791
    )
    
    
    3.94Outstanding at September 30, 2010
    
    
    574,387
    
    
    
    11.65
    
    
    1.6 years
    
    $
    6,838,894Exercisable at September 30, 2010
    
    
    574,387
    
    
    
    11.65
    
    
    1.6 years
    
    $
    6,838,894
  WEIGHTED AVERAGEGRANT-DATE FAIRSHARES
    
    VALUENonvested at December 31, 2009
    
    
    2,158,644
    
    
    $
    17.86Granted
    
    
    139,000
    
    
    
    30.38Vested
    
    
    (105,977
    )
    
    
    17.29Cancelled
    
    
    0
    
    
    
    0Nonvested at September 30, 2010
    
    
    2,191,667
    
    
    
    18.68
  (6) EARNINGS PER SHARE
   Three-Months Ended September 30,
    
    Nine-Months Ended September 30,Basic earnings per share
    
    2010
    
    2009
    
    2010
    
    2009Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    36,378
    
    
    $
    24,460
    
    
    $
    132,911
    
    
    $
    26,753Weighted average common shares outstanding
    
    
    47,586
    
    
    
    46,405
    
    
    
    47,268
    
    
    
    46,304Basic earnings per share attributable to Skechers
U.S.A., Inc.
    
    $
    0.76
    
    
    $
    0.53
    
    
    $
    2.81
    
    
    $
    0.58
 8




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##### 



Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,Diluted earnings per share
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    36,378
    
    
    $
    24,460
    
    
    $
    132,911
    
    
    $
    26,753Weighted average common shares outstanding
    
    
    47,586
    
    
    
    46,405
    
    
    
    47,268
    
    
    
    46,304Dilutive effect of stock options
    
    
    1,590
    
    
    
    690
    
    
    
    1,749
    
    
    
    345Weighted average common shares outstanding
    
    
    49,176
    
    
    
    47,095
    
    
    
    49,017
    
    
    
    46,649Diluted earnings per share attributable to Skechers
U.S.A., Inc.
    
    $
    0.74
    
    
    $
    0.52
    
    
    $
    2.71
    
    
    $
    0.57
  (7) INCOME TAXES
     (8) LINE OF CREDIT AND SHORT-TERM BORROWINGS
  9




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##### 



(9) LITIGATION
  Tamara Grabowski v. Skechers USA, Inc. Grabowski
 Sonia Stalker v. Skechers USA, Inc.  Sonia Stalker v.
Skechers USA, Inc. Grabowski
 10




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##### 



Venus Morga v. Skechers USA, Inc. Grabowski
 (10) STOCKHOLDERS EQUITY
   Nine-Months Ended September 30,2010
    
    
    2009Noncontrolling interest, beginning of the period
    
    $
    3,448
    
    
    $
    3,199Net income (loss) attributable to noncontrolling interest
    
    
    108
    
    
    
    (2,246
    )Foreign currency translation adjustment
    
    
    241
    
    
    
    109Capital contribution by noncontrolling interest
    
    
    31,000
    
    
    
    4,000Noncontrolling interest, end of the period
    
    $
    34,797
    
    
    $
    5,062
 
 (11)
    
    SEGMENT AND GEOGRAPHIC REPORTING INFORMATION  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net salesDomestic wholesale
    
    $
    312,319
    
    
    $
    202,963
    
    
    $
    904,066
    
    
    $
    544,352International wholesale
    
    
    124,623
    
    
    
    100,099
    
    
    
    325,751
    
    
    
    261,140Retail
    
    
    111,825
    
    
    
    95,250
    
    
    
    301,410
    
    
    
    227,541E-commerce
    
    
    5,859
    
    
    
    7,062
    
    
    
    21,022
    
    
    
    14,787Total
    
    $
    554,626
    
    
    $
    405,374
    
    
    $
    1,552,249
    
    
    $
    1,047,820
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross profitDomestic wholesale
    
    $
    129,496
    
    
    $
    82,328
    
    
    $
    387,478
    
    
    $
    194,715International wholesale
    
    
    52,070
    
    
    
    39,281
    
    
    
    138,073
    
    
    
    93,127Retail
    
    
    68,043
    
    
    
    58,449
    
    
    
    191,156
    
    
    
    136,113E-commerce
    
    
    3,042
    
    
    
    3,668
    
    
    
    11,007
    
    
    
    7,803Total
    
    $
    252,651
    
    
    $
    183,726
    
    
    $
    727,714
    
    
    $
    431,758
 11




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##### 



September 30, 2010
    
    
    December 31, 2009Identifiable assetsDomestic wholesale
    
    $
    887,754
    
    
    $
    712,712International wholesale
    
    
    229,527
    
    
    
    192,085Retail
    
    
    112,752
    
    
    
    90,049E-commerce
    
    
    243
    
    
    
    706Total
    
    $
    1,230,276
    
    
    $
    995,552
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Additions to property and equipmentDomestic wholesale
    
    $
    30,443
    
    
    $
    402
    
    
    $
    47,185
    
    
    $
    19,628International wholesale
    
    
    521
    
    
    
    1,718
    
    
    
    3,113
    
    
    
    4,811Retail
    
    
    4,932
    
    
    
    2,217
    
    
    
    15,319
    
    
    
    6,758Total
    
    $
    35,896
    
    
    $
    4,337
    
    
    $
    65,617
    
    
    $
    31,197
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales (1)United States
    
    $
    416,577
    
    
    $
    296,458
    
    
    $
    1,193,410
    
    
    $
    766,865Canada
    
    
    17,472
    
    
    
    14,044
    
    
    
    45,347
    
    
    
    29,988Other international (2)
    
    
    120,577
    
    
    
    94,872
    
    
    
    313,492
    
    
    
    250,967Total
    
    $
    554,626
    
    
    $
    405,374
    
    
    $
    1,552,249
    
    
    $
    1,047,820
 September 30, 2010
    
    
    December 31, 2009Long-lived assetsUnited States
    
    $
    252,382
    
    
    $
    160,444Canada
    
    
    1,390
    
    
    
    866Other international (2)
    
    
    14,870
    
    
    
    10,357Total
    
    $
    268,642
    
    
    $
    171,667
 
 (1)
    
    The Company has subsidiaries in Canada, United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, and Chile that generate net sales within those respective countries and
in some cases the neighboring regions. The Company has joint ventures in China, Hong Kong,
Malaysia, Singapore, and Thailand that generate net sales from those countries. The Company
also has a subsidiary in Switzerland that generates net sales from Switzerland in addition to
net sales to our distributors located in numerous non-European countries. Net sales are
attributable to geographic regions based on the location of the Company subsidiary.(2)
    
    Other international consists of Switzerland, United Kingdom, Germany, France, Spain, Italy,
Netherlands, China, Hong Kong, Malaysia, Singapore, Thailand, Brazil and Chile. 
 (12)
    
    BUSINESS AND CREDIT CONCENTRATIONS  12




---



##### 



Three Months Ended September 30,
    
    Nine Months Ended September 30,2010
    
    2009
    
    2010
    
    2009Manufacturer #1
    
    
    36.3
    %
    
    
    30.1
    %
    
    
    35.4
    %
    
    
    27.8
    %Manufacturer #2
    
    
    12.2
    %
    
    
    14.7
    %
    
    
    12.8
    %
    
    
    12.5
    %Manufacturer #3
    
    
    9.5
    %
    
    
    11.6
    %
    
    
    9.4
    %
    
    
    11.4
    %Manufacturer #4
    
    
    8.6
    %
    
    
    11.1
    %
    
    
    9.0
    %
    
    
    10.6
    %Manufacturer #5
    
    
    6.0
    %
    
    
    4.7
    %
    
    
    4.7
    %
    
    
    6.0
    %72.6
    %
    
    
    72.2
    %
    
    
    71.3
    %
    
    
    68.3
    %
  (13) RELATED PARTY TRANSACTIONS
 
 13




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    international, national and local general economic, political and market conditions,
including the recent global economic slowdown and financial crisis;
    
    entry into the highly competitive performance footwear market;
    
    sustaining, managing and forecasting our costs and proper inventory levels;
    
    losing any significant customers, decreased demand by industry retailers and
cancellation of order commitments due to the lack of popularity of particular designs
and/or categories of our products;
    
    maintaining our brand image and intense competition among sellers of footwear for
consumers;
    
    anticipating, identifying, interpreting or forecasting changes in fashion trends,
consumer demand for the products and the various market factors described above;
    
    sales levels during the spring, back-to-school and holiday selling seasons; and
    
    other factors referenced or incorporated by reference in our companys annual report
on Form 10-K for the year ended December 31, 2009.
    14




---



##### 



Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Percentage of revenues by segmentDomestic wholesale
    
    
    56.3
    %
    
    
    50.1
    %
    
    
    58.2
    %
    
    
    52.0
    %International wholesale
    
    
    22.5
    %
    
    
    24.7
    %
    
    
    21.0
    %
    
    
    24.9
    %Retail
    
    
    20.2
    %
    
    
    23.5
    %
    
    
    19.4
    %
    
    
    21.7
    %E-commerce
    
    
    1.0
    %
    
    
    1.7
    %
    
    
    1.4
    %
    
    
    1.4
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
     Three-Months Ended September 30,
    
    
    Nine-Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    2009Net sales
    
    $
    554,626
    
    
    
    100.0
    %
    
    $
    405,374
    
    
    
    100.0
    %
    
    $
    1,552,249
    
    
    
    100.0
    %
    
    $
    1,047,820
    
    
    
    100.0
    %Cost of sales
    
    
    301,975
    
    
    
    54.4
    
    
    
    221,648
    
    
    
    54.7
    
    
    
    824,535
    
    
    
    53.1
    
    
    
    616,062
    
    
    
    58.8Gross profit
    
    
    252,651
    
    
    
    45.6
    
    
    
    183,726
    
    
    
    45.3
    
    
    
    727,714
    
    
    
    46.9
    
    
    
    431,758
    
    
    
    41.2Royalty income
    
    
    1,888
    
    
    
    0.3
    
    
    
    418
    
    
    
    0.1
    
    
    
    3,148
    
    
    
    0.2
    
    
    
    1,022
    
    
    
    0.1254,539
    
    
    
    45.9
    
    
    
    184,144
    
    
    
    45.4
    
    
    
    730,862
    
    
    
    47.1
    
    
    
    432,780
    
    
    
    41.3Operating expenses:Selling
    
    
    59,516
    
    
    
    10.7
    
    
    
    41,245
    
    
    
    10.2
    
    
    
    146,262
    
    
    
    9.4
    
    
    
    97,568
    
    
    
    9.3General and administrative
    
    
    139,455
    
    
    
    25.1
    
    
    
    110,454
    
    
    
    27.2
    
    
    
    389,241
    
    
    
    25.1
    
    
    
    304,340
    
    
    
    29.1198,971
    
    
    
    35.8
    
    
    
    151,699
    
    
    
    37.4
    
    
    
    535,503
    
    
    
    34.5
    
    
    
    401,908
    
    
    
    38.4Earnings from operations
    
    
    55,568
    
    
    
    10.1
    
    
    
    32,445
    
    
    
    8.0
    
    
    
    195,359
    
    
    
    12.6
    
    
    
    30,872
    
    
    
    2.9Interest income
    
    
    487
    
    
    
    0.1
    
    
    
    322
    
    
    
    0.1
    
    
    
    2,350
    
    
    
    0.2
    
    
    
    1,612
    
    
    
    0.2Interest expense
    
    
    (3
    )
    
    
    0
    
    
    
    (987
    )
    
    
    (0.2
    )
    
    
    (835
    )
    
    
    (0.1
    )
    
    
    (1,944
    )
    
    
    (0.2
    )Other, net
    
    
    (3,143
    )
    
    
    (0.7
    )
    
    
    2,176
    
    
    
    0.5
    
    
    
    (1,323
    )
    
    
    (0.1
    )
    
    
    2,203
    
    
    
    0.2Earnings before income taxes
    
    
    52,909
    
    
    
    9.5
    
    
    
    33,956
    
    
    
    8.4
    
    
    
    195,551
    
    
    
    12.6
    
    
    
    32,743
    
    
    
    3.1Income tax expense
    
    
    16,330
    
    
    
    2.9
    
    
    
    10,175
    
    
    
    2.5
    
    
    
    62,532
    
    
    
    4.0
    
    
    
    8,236
    
    
    
    0.8Net earnings
    
    
    36,579
    
    
    
    6.6
    
    
    
    23,781
    
    
    
    5.9
    
    
    
    133,019
    
    
    
    8.6
    
    
    
    24,507
    
    
    
    2.3Less: Net earnings (loss) attributable to noncontrolling interests
    
    
    201
    
    
    
    0
    
    
    
    (679
    )
    
    
    (0.1
    )
    
    
    108
    
    
    
    0
    
    
    
    (2,246
    )
    
    
    (0.3
    )Net earnings attributable to Skechers U.S.A., Inc.
    
    $
    36,378
    
    
    
    6.6
    %
    
    $
    24,460
    
    
    
    6.0
    %
    
    $
    132,911
    
    
    
    8.6
    %
    
    $
    26,753
    
    
    
    2.6
    %
 15




---



##### 



Net sales
      Gross profit
  16




---



##### 



Selling expenses
   General and administrative expenses
  17




---



##### 



Interest income
  Interest expense
  Income taxes
   Noncontrolling interest in net income and loss of consolidated subsidiaries
   Net sales
   18




---



##### 



Gross profit
   19




---



##### 



Selling expenses
  General and administrative expenses
  Interest income
  Interest expense
  Income taxes
  20




---



##### 



Noncontrolling interest in net income and loss of consolidated subsidiaries
        21




---



##### 



22




---



##### 



Amendments to FASB Interpretation No. 46(R)
      23




---



##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations
 Foreign exchange rate fluctuations
  
 ITEM 4. CONTROLS AND PROCEDURES
  24




---



##### 



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  25




---



##### 



We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   One Principal Stockholder Is Able To Exert Significant Influence Over All Matters Requiring A Vote
Of Our Stockholders And His Interests May Differ From The Interests Of Our Other Stockholders.
  26




---



##### 



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    General Conditions of the Contract for Construction regarding 29800
Eucalyptus Avenue, Rancho Belago, California.10.2+
    
    Construction Loan Agreement dated as of April 30, 2010, by and among HF
Logistics-SKX T1, LLC, which is a wholly owned subsidiary of a joint
venture entered into between HF Logistics I, LLC and a wholly owned
subsidiary of the Registrant, Bank of America, N.A., as administrative
agent and as a lender, and Raymond James Bank FSB, as a lender.10.3+
    
    Amended and Restated Limited Liability Company Agreement dated April 12,
2010 between Skechers R.B., LLC, a Delaware limited liability company and
wholly owned subsidiary of the Registrant, and HF Logistics I, LLC,
regarding the ownership and management of the joint venture, HF
Logistics-SKX, LLC, a Delaware limited liability company.10.4
    
    Second Amendment to Lease Agreement, dated April 12, 2010, between the
Registrant and HF Logistics I, LLC, regarding distribution facility in
Moreno Valley, California.10.5
    
    Assignment of Lease Agreement, dated April 12, 2010, between HF Logistics
I, LLC and HF Logistics-SKX T1, LLC, regarding distribution facility in
Moreno Valley, California.10.6
    
    Third Amendment to Lease Agreement, dated August 18, 2010, between the
Registrant and HF Logistics-SKX T1, LLC, regarding distribution facility
in Moreno Valley, California.31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1***
    
    Certification of the Chief Executive Officer and the Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 +
    
    The Company has applied with the Secretary of the Securities and Exchange Commission for
confidential treatment of certain information pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended. The Company has filed separately with its application a copy
of the exhibit including all confidential portions, which may be made available for public
inspection pending the Securities and Exchange Commissions review of the application in
accordance with Rule 24b-2.***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed
filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act. 27




---



##### 



SIGNATURES
  Date: November 9, 2010
    SKECHERS U.S.A., INC.By:
    /s/ DAVID WEINBERGDavid WeinbergChief Financial Officer 28